MarIus

The vessel Heroic Idun was insured by DNK for the period 21 July 2022 to 31 December 2022 on the Nordic Marine Insurance Plan of 2013, Version 2019. On 8 August 2022, Heroic Idun was drifting close to the AKPO offshore oil terminal, located approximately 10 nautical miles within Nigeria’s Exclusive Economic Zone and about 200 kilometres from Port Harcourt. The vessel was under instructions from her charterers to load a cargo of crude oil at the AKPO Terminal. The area was designated as being high-risk for piracy. That evening, Heroic Idun was approached by the Nigerian Navy vessel NNS Gongola, which expressed concerns regarding the absence of the necessary clearances for loading at the terminal and ordered the vessel to proceed to Bonny Fairway Buoy, located approximately 64.5 nautical miles from the AKPO Terminal and serving as a key operational base for the Nigerian Navy.

The assured argued that the Master and the crew were unable to identify NNS Gongola as a naval vessel and, therefore, perceived the approach by the unidentified vessel as a potential piracy attack. Due to this misunderstanding the Master did not comply with the order to proceed to Bonny Fairway Buoy, but decided instead to sail Heroic Idun away from the potential threat and out of Nigerian waters. The insurer, on the other hand, argued that the Master and crew did indeed recognize the vessel to be a naval vessel and, in any event, that the absence of adequate steps being taken by the Technical Manager to identify the approaching vessel as a naval vessel amounted to gross negligence under the insurance contract.

After Heroic Idun had sailed away from NNS Gongola, she was drifting in international waters between 9 and 12 August 2022 outside of the Nigerian EEZ while assessing the situation and exploring the options to proceed. However, on 12 August 2022, at the request of the Nigerian authorities, Heroic Idun was arrested in the EEZ of São Tomé and Príncipe by the Equatorial Guinean Navy vessel Capitan David. The arrest was effected on the basis of alleged violations said to have been committed by the vessel in Nigerian waters and that the vessel had evaded NNS Gongola. The vessel and its crew were subsequently detained in Equatorial Guinea for a period of approximately three months. In addition, the claimant was required to pay a fine of approximately EUR 2,000,000 in respect of alleged breaches of Equatorial Guinean law.

On 11 November 2022, again at the request of the Nigerian authorities, Heroic Idun and its crew were escorted and transferred from Equatorial Guinea to Nigeria.

Upon arrival, both the vessel and its crew were formally charged with respect to the events that occurred outside the AKPO Terminal on 8 August 2022. They remained in detention in Nigeria for a further period of more than six months.

The Heroic Idun was released on 27 May 2023, following a plea agreement between the assured and the Nigerian State. Under the agreement, the assured agreed to pay restitution in the amount of USD 15 million and to publish a formal apology, expressing its sincere regret for the difficulties caused to the Nigerian Navy and any embarrassment arising from the vessel’s evasion of the Nigerian navy on 8 August 2022.

The assured’s primary claim was for USD 180,000,000 plus interest, based on the contention that Heroic Idun was “captured at sea” by a “foreign State power”, cf. NP. Cl. 2-9 sub-clause 1 letter b and not released “within six months from the day the intervention took place”, cf. NP Cl. 15-11.

The main contested issue in relation to the primary claim was whether the detention of Heroic Idun by Equatorial Guinea, and/or the subsequent detention by Nigeria, qualified as interventions “made for the furtherance of an overriding national or supranational political objective” within the meaning of Clause 2-9 sub-clause 1 letter b. The insurer argued that none of the interventions were undertaken in furtherance of such an objective, but rather for the purposes of ordinary law enforcement, which falls outside the scope of cover under the war risk insurance.

The Tribunal pointed out that the chain of events that began on 8 August 2022 with the Nigerian Navy’s request for a seemingly routine inspection of Heroic Idun would generally qualify as an instance of law enforcement and not a war risk. “However, on a panoramic view of the facts, there are features of this case which stands out and could distinguish it from a matter of ordinary law enforcement that is not covered by the war insurance” (para 1220). The Tribunal found it unlikely that the sequence of events that happened would have occurred without decisions and coordinated actions by governmental or other overarching authorities of Equatorial Guinea and Nigeria. It was “also apparent that the cooperation between the two States in relation to the arrest and detainment of the Heroic Idun formed part of a broader policy aimed at combatting piracy and maritime crime in the region. Moreover, the Heroic Idun’s evasion from the Nigerian Navy on 8 August 2022 seems to have caused embarrassment to the Navy and to have been perceived as reflecting negatively on its progress and deterrent capacity in combating piracy and maritime crime” (para 1223).

Given “the governmental functions, policy issues, and concerns involved, the intervention against the vessel might be said to have had a “political dimension”, in the conventional understanding of that term. The pivotal question for the Tribunal is whether this “political dimension” meant that the interventions were “made for the furtherance of an overriding national or supranational political objective” in the meaning of Clause 2-9 sub-clause 1 letter b and thereby was covered by the war risk insurance” (para 1224).

The Tribunal analyzed the expression “overriding … political objective” as used in the four arbitration cases and the Commentary and stated:

“that although interventions by lower-level state authorities may be political in a broad sense – for example, if taken to influence the policy decisions of the president or government, to strengthen the authority's position in relation to rival institutions, or to affect decisions on funding – such interventions are not covered by war risk insurance unless they are carried out in furtherance of an overriding political objective established at a higher level of the state hierarchy. In the Sira case, the sole arbitrator observed that an intervention by a lower-level body, such as detaining vessels in an attempt to win the favour of political candidates ahead of a presidential election or to “make a mark” in relation to other government entities at the same level, could not in itself be regarded as an act taken in furtherance of overriding political objectives”.(10) Para 1245, referring to Sira, last page.

The Tribunal further observed that “political objective” in this context had a rather narrow meaning; “Interventions for any political objective in general will not qualify for cover. The relevant political objectives are qualified by the characterization “typical for war or times of international crisis and can often be explained by foreign policy considerations” and negatively by the exclusion for law enforcement and regulations. Hence, the term “overriding political objective” must be read in conjunction with these qualifications” (para 1247).

The Tribunal pointed out that although the Commentary used the expression “typical for war or times of international crises and often can be explained by foreign policy considerations”, this expression was not discussed further (para 1249). The expression could not be similar in meaning to war or war-like conditions, as this was covered in letter a (para 1250). The qualification originated from the Chemical Ruby case, where the sole arbitrator suggested that a politically motivated detention during peacetime may also be covered, giving the following two examples of such cases:

1. A detention forming part of a boycott or retaliatory action against the vessel’s flag state, or the state from which the cargo originates or to which it is destined, where the specific circumstances of the vessel play a lesser role;

2. A politically motivated detention based on an unfounded suspicion that the insured vessel has violated regulations aimed at protecting the security of the state in question, or on a suspicion that persons on board have engaged in espionage, or assisted saboteurs, insurgents, or similar actors (para 1251).

The Tribunal also observed that whereas the Commentary used the term “international” crises, this was not reflected in the wording of the arbitration cases and that one had to include “national crisis” to give meaning to the context (para 1254).

The Tribunal concluded that the difficulty of analyzing the individual components of the expression “interventions for the furtherance of overriding political goals typical for war or times of international crisis” in isolation “strongly suggests that the phrase should be understood as a whole in the context in which it was used in the Chemical Ruby case, namely as a flexible requirement encompassing key situations covered by war risk insurance, by contrast to Law Enforcement” (para 1256). As a result, the Tribunal found it necessary to carry out an overall assessment of the circumstances, guided by those general characteristics of covered situations and contrasting them with the types of “Law “Enforcement” measures that are excluded from cover under the provision (para 1257).

The Tribunal referred to the remarks in the Commentary on the delimitation of overriding political goals with regard to the “Law Enforcement” referred to above (para 1258) and remarked that the reasoning and the examples “have a strong bearing on the understanding of what is not to be considered “overriding political objectives” in Clause 2-9, sub-clause 1(b). Thus, even though law enforcement, by way of interventions against vessels in principle, could have been considered to promote overriding political objectives in a broader and conventional understanding of that expression, such as political objectives relating to national security, public health, and the regulation of trade and commerce, it is not covered by Clause 2-9, sub-clause 1(b). The latter illustrates that it may be “easier to determine what is not covered by Clause 2-9, sub-clause 1(b) than setting out what is covered” (para 1259).

The Tribunal emphasized that the Commentary on law enforcement did not mention measures taken to combat piracy. The Tribunal however agreed with the Sira case that such measures must be considered to fall within the scope of police regulation “in its pure form” (Sira case, p. 265) (para 1260).

The Tribunal further pointed out circumstances that would not be sufficient to qualify as “overriding … political objectives”:

1. Misuse of power. An intervention that significantly exceeds what was necessary or common for the relevant kind of law enforcement, may indicate that it was motivated by “an overriding political motive”,(11) Para 1261 with reference to the Germa Lionell case as referred in Wilhelmsen and Bull, p. 97, and Brækhus and Rein, p. 74. but that is not sufficient. The assessment of “misuse of power” was not to be made using an objective norm but should be based on what could be expected in the relevant legal system (para 1262).

2. The involvement of the president or government (1263). “In legal systems that do not adhere to the same separation of powers between the executive and the judicial branch as in, for example, the Nordic countries, it may not be unusual for the government to be involved in important matters or for certain decisions that would in other countries typically be made by the courts. However, as with misuse of power, the fact that decisions relating to an intervention justified as law enforcement are made by the president or any other overarching body may, if supported by other circumstances, indicate that the true motive behind the intervention is to further an overriding political objective” (para1264).

The Tribunal also discussed the problems relating to proving the objectives of the intervention taken (para 1272). A major problem in this regard was that ^{neither the} insurer nor the assured normally had first-hand access to evidence showing whether or not an intervention made by authorities in a state, often a foreign state, was motivated by “overriding political objectives”, and that it would be hard to obtain access to such evidence. The relevant state would often not be willing to provide access to such evidence, which might be politically or diplomatically sensitive. Furthermore, the relevant state might have an evident interest in not shedding light on such a case; for example, where its authorities have not complied with the rule of law (para 1273).

Based on the legal sources, the Tribunal put forward the following guidelines to establish whether the intervention was motivated by overriding political objectives:

1. The general domestic and foreign political situation may explain the detention, with the specific circumstances of the individual vessel playing a lesser role. The intervention is generally politically motivated if the intervention against the vessel is merely instrumental in achieving a broader political objective; for example, where the detention forms part of a boycott or retaliatory action against the vessel’s flag state, or against the state from which the cargo originates;

2. The intervention is caused by an unfounded suspicion that the vessel has violated regulations intended to protect the security of the state in question, or has otherwise threatened the state’s security interests; for instance, suspicions that the crew on board, or individuals connected to the shipowner, have engaged in espionage or provided assistance to saboteurs or political opponents of the state;

3. The intervention exceeds what would be considered necessary for the purpose of law enforcement; for example, if its duration is longer than usual by the standards of the legal system in question, or if the authorities resorted to violence against the master or crew in connection with the intervention;

4. The intervention against the vessel was initiated or involved participation by the government or another overarching authority, and it cannot reasonably be explained as a legitimate act of enforcing customs, police, safety, or navigation regulations, or as the enforcement of any private law rights, having regard to how such decisions are normally made in the state in question;

5. Circumstances of war and crisis, broadly understood, may generally support a finding that the intervention was carried out in furtherance of an overriding political objective, and ease the evidentiary threshold required to show that it is attributable to such an objective, rather than to an act of law enforcement (para 1278).

The assured had argued that the war risk insurance was triggered for the period from 12 August 2022 to 28 May 2023, as a result of the capture and subsequent detention of Heroic Idun by Equatorial Guinea and, later, by Nigeria. The assured contended that the following decisions made by the authorities of Equatorial Guinea and Nigeria should be assessed separately in respect of their motives:

• The evasion of Heroic Idun from the Nigerian Navy on 8 August 2022;

• The capture of Heroic Idun on 12 August 2022;

• The further detainment of Heroic Idun in Equatorial Guinea;

• Equatorial Guinea’s decision to rendition Heroic Idun to Nigeria, and;

• Nigeria’s request of Heroic Idun and the detention in Nigeria.

The Tribunal analyzed all these decisions based on the factual evidence as presented by the assured and concluded that none of the decisions were based on overriding political objectives as required by Cl. 2-9 sub clause 1 letter b (para 1387). As a final step, the Tribunal tested this conclusion by way of an overall assessment, measured against the guiding factors set out above:

1. There was little to suggest that the interventions could be explained by foreign policy considerations. It was not evidenced that the measures constituted any form of retaliatory action directed at Heroic Idun’s flag state or any other state involved in the ownership, operation, or management of the vessel, or that the vessel was used as a tool or proxy to advance any political objective beyond those connected to law enforcement. On the contrary, the submitted evidence indicated that the intervention was triggered by what the Nigerian authorities perceived as a breach of applicable regulations through entry into the AKPO Terminal area without the necessary authorisation, Heroic Idun’s failure to comply with instructions issued by the Nigerian Navy, and the transmission of what was understood to be a false piracy alert.

2. Although representatives of a Nigerian delegation attending an International Maritime Organization meeting in London in November 2022 are on record as stating that Heroic Idun matter “bothers on National Security”, there was no evidence that this incidence posed any immediate or concrete threat to the national security interests of Nigeria. Nigeria had never claimed that the Vessel was in violation of any rules or regulations that represented a threat to the security of the Nigerian state.

3. Even if the conduct of Nigeria under the investigation did not comply with ordinary standards of due process, the evidence presented in relation to other interventions involving vessels in Nigeria did not support a finding that the duration of the criminal investigation in this case exceeded what would ordinarily be regarded as typical within the Nigerian legal system.

4. Although the intervention against Heroic Idun probably involved participation by the government or other higher authorities, the Tribunal found that such involvement was essentially motivated by law enforcement, that is, the enforcement of customs, policing, safety, or navigation regulations, and not undertaken in furtherance of any overriding national or international political objective.

5. Although maritime crimes no doubt raised serious concerns for Nigeria at the time of the intervention, the situation could not be characterized as one of “war or times of crisis” that could warrant a lowering of the threshold for finding that the intervention was driven by an overriding political objective, rather than by an interest of law enforcement (para 1388).

The vessel was detained for lacking the necessary permit to import a cargo of urea fertiliser, which could lawfully be imported only by two designated Nigerian companies. It was undisputed that one motivation behind the restriction was to prevent the terrorist group Boko Haram from obtaining urea for use in bombmaking. However, in assessing whether the detention was taken in furtherance of an overriding political objective, the Tribunal held that, although the underlying reason for the restriction reflected such an objective, it was too remote to be regarded as the decisive cause of the detention. Rather, the arbitral tribunal found that the primary motivation of the intervention was the breach of import regulations, and that detention was a typical and foreseeable consequence of such a breach, regardless of any broader political motive.